The tendency for private saving to increase in response to growing government deficits is known as the

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The tendency for private saving to increase in response to growing government deficits is known as the Ricardo- Barro effect, named after economists David Ricardo and Robert Barro. According to this theory, people recognize that government deficits imply future tax increases or reduced government spending, so they increase their own saving to prepare for these future events.

The Tendency for Private Saving to Increase in Response to Growing